Australia-based wholesaler Excite Holidays collapsed into voluntary administration last week. Lawyer Farina Azam examines what the implications are for agents under the Package Travel Regulations.
As a wholesaler, Excite Holidays sold holidays on a B2B basis to tour operators and travel agents – they did not contract directly with consumers. This means all Excite holidays should have been re-sold to consumers under the agent’s or tour operator’s own brand, terms and conditions, price and – where applicable – Atol, Abta or other form of financial protection.
Crucially, it also means that agents and tour operators are legally responsible to customers for the provision of the Excite Holidays sold to customers.
Since the majority of these holidays will have been sold to customers as package holidays, the agents and tour operators, being the package organisers, need to turn to the Package Travel and Linked Travel Arrangements Regulations 2018 (PTR) to understand their legal obligations to customers in these circumstances.
Essentially, package organisers must fulfil the customer’s booking with, where possible, the same services which Excite was contracted to provide – or if that’s not possible a suitable alternative of a comparable standard. It’s been mentioned that some of Excite’s suppliers have already started contacting agents and tour operators offering to fulfil the Excite Holidays at the same price as was being offered to Excite – which would mean minimal disruption to customers and no liability under the PTR.
If it isn’t possible to use the same suppliers, package organisers should, where possible, offer an alternative to the customer, preferably that causes minimal disruption. For example, a change of accommodation to another of the same or a higher standard, would be considered a “minor change”, as would a change to the length of the holiday by less than 12 hours – and therefore no liability under the PTR.
However, if this isn’t possible, for example, package organisers are only able to offer the customer accommodation or other services of a lower standard, or the alternative services change the length of the holiday by more than 12 hours, then this counts as a “significant change” and the customer is legally entitled to cancel their entire holiday and receive a full refund. Package organisers may also be liable to pay the customer compensation in these circumstances.
Package organisers may be able to argue that the failure of Excite Holidays is an "unavoidable and extraordinary circumstance" (UEC – being a situation outside the package organiser’s control, the consequences of which could not have been avoided even if all reasonable measures had been taken), and as such, there shouldn’t be any compensation liability – something which was successfully argued after the failure of the Thomas Cook Group.
However, Excite Holidays is smaller, with readily available alternative suppliers on the market, and the offer from Excite’s own suppliers to deal directly with the trade at the same prices means this argument will be more difficult to run.
If the customer decides to accept a lesser alternative, they’ll only be entitled to a price reduction between the cost of their original holiday and the alternative (and not a full refund or any compensation).
Lastly, if the package organiser decides to cancel the customer’s entire holiday, they will be responsible for a full refund and potentially compensation liability as discussed above. I would advise caution before deciding to cancel holidays; I think package organisers may struggle to argue that the failure of Excite is UEC, and therefore they don’t legally have the right to cancel a package under the PTRs.
Farina Azam is a partner and travel lead at Kemp Little LLP
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